The Gig Economy: A Guide For Modern Businesses & Startups [FREE Download]

Learn how to do business and manage employees successfully in the gig economy.

The gig economy (a.k.a. digital platform work) is getting bigger. In America, around a third of the working population is already in some gig capacity.

Not surprisingly, the trend is going strong in the post-pandemic world and in the economic recession. Many companies are opening up to new and unconventional ways of doing business to cut costs in uncertain times.

So how can your business make the most of the gig economy? Are you ready for it? Do you have the right technology in place?

Get ready to welcome more gig workers into your organization and get it right!

What is the gig economy?

The gig economy allows companies to hire independent workers for short-term commitments: part-time hires, freelancers, independent contractors, project-based workers, or other temporary workers. 

It’s also called digital platform work as digital platforms connect freelancers/gig workers with potential clients. 

Gig economy jobs are common in:

• Accounting and finance, e.g. independent consultants
• Administration, e.g. admin assistants
• Content production, e.g. copywriters
• Design, e.g. graphic designers
• IT, e.g. security engineers
• Media, e.g. photographers
• Project management, e.g. project managers
• Software development, e.g. DevOps engineers
• Transportation, e.g. ride-hailing drivers

Examples of the gig economy

Uber, the largest ride sharing company in the world, is a great example of a company employing gig workers. Uber’s business model is dependent on large numbers of people (drivers) who don’t feel particularly attached to the company, mainly due to the type of contract.

Other examples of gig economy jobs include: 

• TaskRabbit workers
• Airbnb landlords
• Online marketplace sellers
• Influencers
• On-call workers
• Seasonal workers
• Consultants

Top gig economy platforms include Fiverr, Upwork, Toptal, PeoplePerHour, Uber, Bolt, Glovo, etc.

Gig economy growth

In 2020, the gig economy experienced significant increases, mainly in response to COVID-19. This was the effect of significant job losses, but also the new independent work opportunities the pandemic created, e.g. virtual assistants in digital customer experience. 

Technology and automation played a big role in this shift. Additionally, new opportunities made many workers reevaluate their priorities. Companies, in turn, decided to reevaluate their budgets.

Fast forward to today, and the number of gig workers has gone up since the pandemic hit. It’s expected to keep rising.

First, in uncertain times, more and more workers are on the lookout for alternative incomes. Second, people are increasingly prioritizing lifestyle over earnings. This appears to be easier for freelancers than for those working full-time jobs. 

Independent workers who switched to the platform economy by choice are the most satisfied group within the workforce.

McKinsey

The world of work keeps changing and employers need to adapt to the new reality.

Significant gig economy statistics

The spreading of the gig economy is a phenomenon in both developed and developing countries. 

Unfortunately, it’s difficult to estimate exactly the size of the gig economy, especially when freelancers work in addition to their main job. 

Still, the stats below will help you better understand the overall size of the gig economy.

Gig economy in numbers

1. Around 36% of US workers (approximately 57.3 million people in total) were part of the gig economy before the pandemic (Gallup, Statista).
2. The gig economy grew by 33% in 2020, expanding 8.25x faster than the US economy as a whole (Small Biz Trends).
3. US freelancers contributed $1.21 trillion to the US economy in 2020 (MBO Partners).
4. 40% of US-based workers generate a big part of their income via the gig economy (PYMNTS).
5. 20-30% of the workforce in the USA and the EU-15 is part of the gig economy: that’s up to 162 million working-age people (McKinsey).
6. The number of independent workers in the EU rose by 24% between 2008 and 2015: from 7.7 million to 9.6 million (the Association of Independent Professionals and the Self Employed). Over 28 million people in the EU are currently working via digital platforms (European Commission).
7. The gig economy in the UK accounts for 4.7 million workers and doubled in size between 2016 and 2019 (The Guardian).
8. A 513% YOY increase in new gig workers was reported in Japan since the COVID-19 outbreak (vs. 329% in Spain and 300% in the UK) (PeoplePerHour).
9. India is home to the 2nd largest market of freelancers who constitute about 40% of total freelance jobs offered worldwide (ICRIER Future of Work in the Digital Era).
10. The gig economy generates $204 billion in gross volume (globally) with transportation-based services comprising 58% (Mastercard’s survey). 

Demographics and salary-related statistics

Who exactly are gig workers and how much do they earn on average?

Check out these stats:

• Millennials account for 33% of all freelancers, fueling the expansion of independent work (MBO Partners).
• 37% of full-time independent workers are aged 21-38 (MBO Partners).
• 25–34 is the most prominent age group when it comes to independent workers. They get paid $19 per hour on average (Payoneer). The 55–64 age group makes up a small percentage of the total workforce, yet they get paid the most ($36 per hour).
• Freelancers charge $21 per hour on average (Payoneer’s Income Survey).
• 64% of full-time workers want to do “side hustles” to make extra money (Deloitte).

The benefits of the gig economy for employers and employees

What are the benefits of the gig economy? Who benefits most from this employment trend?

The gig economy benefits both employers (businesses) and employees by making work more adaptable to the needs of the moment and the demand for flexible lifestyles. 

Gig economy benefits for employers (businesses)

The digital platform economy has many benefits for businesses, especially for economic reasons.

Consider these stats:

• 33% of organizations say they’re using alternative arrangements for IT, 25% for operations, 15% for R&D, and 15% for marketing (Deloitte).
• According to 62% of executives, an external workforce enables them to improve the company’s overall financial performance (SAP Fieldglass). For instance, companies economize on employee benefits and office overheads.
• Almost three-quarters of executives cite the importance of gig workers in sourcing hard-to-find skills (SAP Fieldglass).
• 3 in 5 leaders increasingly prefer to “rent”, “borrow” or “share” talent with other companies, making their full-time staff smaller (Harvard Business School).

In a nutshell, integrating an alternative workforce into their operating model can help businesses:

• Lower costs, e.g. when companies don’t have to pay for health insurance or employee benefits
• Access top talent and a niche set of skills (if the talent proves to be less than acceptable, there are no issues with letting them go)
• Get expert advice on specific topics
• Experiment with a new venture before they decide to invest in full-time employees
• Deal with many unexpected situations, e.g. in the case of unpredictable demand by using extra staff to deal with seasonal demand
• Build a more flexible business model for both the company and employees

Unfortunately, some processes can also get complicated, especially for high-volume employers who deal with the dynamic process of hiring and paying a flexible workforce and frontline workers.

Symmetrical can help such companies radically simplify the way they hire and pay people. Our automated payroll services will improve your payroll system, and reduce your existing costs, especially the high cost of running payroll.

Gig economy benefits for employees

The digital platform economy also benefits employees. The majority of gig workers enjoy the independence, flexibility, and job variety this type of employment allows. 

Many gig workers report higher happiness and satisfaction levels with their work compared to people in traditional full-time employment, even if they have to work more and/or earn lower salaries (BCG Henderson). 

Increase the satisfaction of your employees with HR Calendar 2023!

According to BambooHR’s survey, the top reasons why people leave their jobs include dissatisfaction, mental health, poor pay, and unethical leadership.

Consider these stats:

1. 79% of full-time independent workers say they’re happier working on their own than at a traditional job (MBO Partners).
2. Around 60% of male gig workers and over 70% of female freelancers say they enjoy working independently due to the flexibility this type of work offers (MBO Partners).
3. 51% of freelancers would not go back to traditional work (Upwork).
4. 64% of gig workers report that they’re doing their preferred type of work (Gallup).
5. 84% of freelancers are living their preferred lifestyle compared to 54% of employees working in traditional jobs (Upwork).

Some of the key reasons for freelancing include: 

• The ability to work remotely (depending on the specific job)
• Work-life balance 
• Independence, autonomy, and control (being your own boss/self-employed)
• The possibility to earn extra money on the side
• Pursuing a passion outside of work
• Spending time on more interesting and meaningful tasks
• Financial stability during the recession
• Necessity

For this reason:

The impact of technology and automation in digital platform work

The impact of technology is significant in the gig economy. Above all, thanks to technology, “gigs” have become easily accessible. As a result, freelancing, which used to be a side hustle, has turned into a trillion-dollar industry with millions of participants.

There’s a wide range of gig work apps and freelance platforms, such as Freelancing, Upwork, or Fiverr.

Consider these stats:

• Almost 80% of freelancers say technology makes it easier to find work (Upwork).
• Over 70% of freelancers find jobs through gig economy websites, such as Upwork, Fiverr or Toptal and online markets (Payoneer).
• Around 70% of gig workers aged 18-24 use the Internet in their job hunts (PYMNTS).
• Around 60% of gig workers use digital marketplaces to find new opportunities (PYMNTS).
• Electronically mediated workers are more likely to be in the age category from 25 to 54 (BLS).

The role of automation and gig apps

With platform workers using new gig apps and digital processes, the new digital engagement opens up unexplored territory in gig work. 

The bottom line: Businesses can expect some rapid changes.

The question is: Will companies have the technology to meet the new gig reality?

One thing is certain: companies employing gig workers will need software and digital apps that simplify complex processes, e.g. an app that would allow gig workers to pay into a healthcare fund.

Take Uber as an example. The company has been so successful as it delivers a data-driven unified experience. For instance, the Uber app shows drivers what goals they need to accomplish (and how). This model shows the importance of simplicity in gig work. 

The gig economy needs only apps that simplify processes. This is the future of the gig economy. 

Piotr Smolen, CEO at Symmetrical

Now consider payroll: one of the most important aspects for HR and finance departments to deal with when hiring gig workers. Flexible work, high-volume recruitment, and global hiring opportunities mean much more complex and volatile hiring and payroll operations, especially when gig workers sell their skills and services ad hoc. 

As a result, simplicity, flexibility, and efficiency are essential. The truth is that manual work and multiple spreadsheets are not an option any more. Unfortunately, most payroll solutions are not ready for this change.

Still, the gig economy is growing fast. For this reason, get ready to hire more platform workers. Don’t wait to prepare your business for the future.

The challenges of the gig economy

The growth of the gig economy brings not only opportunities, but also challenges.

From the employee’s perspective, for instance, there’s the issue of job security and medical coverage. The self-employed lifestyle doesn’t come ready-made with benefits such as a healthcare plan. However, in the USA, 84% of workers cite health insurance as the benefit they care about most, followed by sick leave (83%). 

Furthermore, platform workers miss out on “soft” benefits like corporate discount programmes and subsidized gym memberships. It’s also more difficult for them to find advice and mentorship without a workplace.

According to Brodmin:

• 54% of gig workers don’t have access to employer benefits
• 40% have medical insurance 
• 20% receive life insurance 

In a nutshell, gig employees are concerned about:

• The lack of  job security, proper contracts, medical coverage, and workplace benefits
• The lack of transparency and predictability in working conditions 
• The increasing isolation of gig work
• Income instability
• Retirement planning
• Setting boundaries at work

From the employer’s perspective, hiring gig workers means lower costs. However by moving to a more on-demand model, businesses lose the institutional knowledge historically held by regular employees. 

Employers are also concerned about:

• The erosion of traditional relationships between workers, businesses, and clients
• The cross-border dimension of platform work and the issue of algorithmic management
• Tax implications
• An increasing number of legal cases and worker protests, e.g. due to unfair dismissals

From a wider social perspective, the gig economy can resemble a modern servant economy with underprivileged social groups that have to choose between flexibility and stability. 

From a legal perspective, digital platform work remains unregulated and has numerous legal loopholes and outdated laws. This may have long-term consequences for both employees and employers.

For this reason, the EU is planning to better regulate digital platform work and improve the protection of gig workers.

Regulating the gig economy: the EU example

Over 28 million people in the EU are currently working via digital platforms. Now the big debate is over the working conditions of platform workers, which may affect up to 4.1 million employees.

In December 2021, the European Commission proposed legislation on improving the working conditions for gig workers. The EU law would set minimum requirements across the bloc, which national lawmakers might decide to develop further. 

Thanks to the EU Directive, EU-based gig workers would be reclassified as employees and would enjoy the same labor rights as other traditional employees. The remaining could be recognized as genuinely self-employed.

Gig workers classified as employees would gain the right to: 

• A minimum wage
• Safety protections
• Insurance against workplace accidents
• Healthcare
• Paid leave
• Old-age pensions
• Unemployment benefits
• Collective bargaining

The EU has set a deadline of 2025 for the rules to be written into national law books. This should happen before the gig economy becomes too big to handle.

In a nutshell, regulating the gig economy will help:

• Bring more legal certainty for platforms and employees
• Close existing loopholes and end fake self-employment
• Set international labor standards
• Ensure workers can keep the same profile, including its ratings, across different platforms
• Reduce the number of court cases with sometimes contradictory outcomes (especially related to the employment status of platform workers or when gig workers have to go to court against a massive opponent such as Uber)
• Minimize the risk of building a system that will resemble a modern servant economy with underprivileged social groups.

The gig economy and algorithm management

Digital platforms connecting gig workers to jobs usually use algorithms and automated systems to monitor workers, allocate tasks, organize shifts, and set prices. 

Algorithmic management is a set of practices whereby decision-making functions are assigned to AI-driven software and apps. Unfortunately, this automated decision-making system may leave some workers unable to understand the logic behind their chores and fees.

Still, it’s important that gig workers feel comfortable using platforms and automated systems that monitor their performance and support the decision-making process in terms of assignments and earnings. 

Hence, the EU directive aims at increasing algorithm transparency. The goal is to strengthen human monitoring of automated decisions and, if they’re incorrect or unfair, introduce the right to contest and rectify them. 

Additionally, workers will be able to obtain more information on how they’re being supervised and evaluated. Platforms won’t be allowed to collect personal data that is not related to the workplace. Using Artificial Intelligence also requires a regulatory framework.

The EU Directive for gig workers: challenges

The EU proposal predominantly impacts the ride-hailing and food-delivery industries. It affects not only employees, but also consumers, restaurants, lawyers, and the wider economy.

Unfortunately, the legislation is expected to bring more legal clarity, but also disappointment. For instance, employees may need more protections, but not all of them want to go through a contract. Some of them like their current flexibility and wages.

Platforms are skeptical, too. They say that workers should be able to choose their own form of employment. The EU proposal will make it impossible for many platform workers to work for more platforms or to decide their working hours. It may also put thousands of jobs at risk.

Potential negative consequences related to the new regulations include:

• Limited flexibility and lower salaries for gig workers
• Shrinking job opportunities and job losses (e.g. reclassification can force gig companies to shut down operations in cities with fewer inhabitants)
• Higher costs for employers
• Higher costs of services (where consumers expect lower prices, e.g. Bolt). 
• Some platforms changing their business models or leaving a particular market or region
• Gig companies stretching the rules and competing unlawfully with firms that do comply
• The risk of black market practices
• The issue of covering the additional costs associated with the new rules
• The regulated model may not be sustainable long-term

Regulating the gig economy in practice: Spain

In August 2021, Spain became the first European country to significantly regulate the gig economy. The Supreme Court declared that riders were not self-employed workers but rather employees.

The so-called riders’ law was the Spanish government’s response to protests against low wages and job insecurity in the gig economy. 

The law requires that delivery companies:

• Directly hire their riders
• Stay transparent about how their app’s algorithms affect working conditions as well as hiring and firing decisions.

However, a law to improve the working conditions of gig workers in Spain backfired as companies were reluctant to implement it. Many employees, in turn, got paid less and had to work more hours, which made riders confront their employers.

The truth is that not all riders dream of becoming staffers, but prefer being contractors working for several platforms.

The riders’ law in Spain: the response of delivery companies

After the riders’ law came into force, most delivery companies in Spain worked hard to subvert or ignore the law.

Gig companies like UberEats were supposed to provide employee status for their riders. Instead, UberEats fired 3,000 self-employed workers (so they didn’t have to hire them) and started hiring riders through third-party companies (unions consider this practice illegal). 

The British unicorn Deliveroo decided to leave Spain entirely.

Glovo attempted to respond to the employment court’s orders without explicitly changing workers’ status. The goal was to create a new “independent contractor collaboration model” to provide the flexibility, autonomy, and independence that many employees value.

In reality, however, the changes to the algorithm undermined the freedom for riders to work when they chose and for the rate they wanted.

It’s an important lesson for the rest of Europe. Before other European states contemplate similar laws to regulate the gig economy, policy makers should learn from the mistakes made in Spain.

Piotr Smolen, CEO at Symmetrical

Gig economy: trends and the future

Despite all the challenges, the future of digital platform work looks bright.

The gig economy is expanding 3 times faster than the total US workforce. There’s a massive shift from traditional work and full-time employment to freelancing, independent contracting, and working part-time. 

The fact is that in the post-pandemic world, more and more job seekers will be turning to digital platform work. As most gig workers seem to be happy working independently, gone are the days of working 9-to-5 in a cradle-to-grave job.

All facts considered and according to some projections, gig workers may outnumber the traditional workforce in many sectors. This will impact both workers and businesses.

Consider these stats:

• 86% of freelancers think the industry has a bright future (Upwork).
• Around 40% of executives worldwide expect freelancers to account for an increased share of their organization’s workforce over the next few years. 50% agree that corporate adoption of gig platforms would be a significant trend (BCG Henderson).
• By 2027, 60% of the US workforce will be independent (Business2Community).
• By 2027, companies will be spending $6 billion on improving the rights of gig workers (Business2Community).
• 80% of large US companies plan to increase their reliance on a flexible workforce and more non-traditional workers in the coming years (Intuit).

Thus, independent work has big growth potential.

Gig economy trends: what else can we expect?

#1. The gig economy is expected to impact the legislative and payroll processes. 

In the future, gig workers should have more rights and protection. They should also be payroll employees. Without being on a regular payroll, they may struggle with getting paid on time, or at all. 

Thus, a modern automated payroll solution will be a must for employers, especially if they hire large numbers of gig workers.

Automated solutions will be essential for employers. In fact, they already are. Having the right technology and software will be extra important for HR, payroll and finance teams.

Piotr Smolen, CEO at Symmetrical

#2. Technology will help gig workers collaborate more easily (and more often).

People want to earn more from work than money. Gig workers usually do similar work activities as traditional employees, but they don’t collaborate. Luckily, technology and digital transformation can help them form a community. 

For example, a gig work app can have its own built-in social feed. Users could: 

• Celebrate accomplishments
• Receive notifications from other creators complimenting their work (notifications about accomplishments can raise user-app engagement)
• Forge connections 
• Share insights

Symmetrical’s automated solution does that, too: it makes work easier for gig workers (as well as for HR departments and other business executives).

#3. Traditional office employees are likely to demand a setup that looks more like gig work with all its flexibility.

Not everybody feels comfortable returning to the office in the post-pandemic world. Many people have redefined what work is. Businesses and HR departments must be ready for this. They will also need simple solutions that will make their lives easier.

Gig economy: conclusion

The gig economy creates new opportunities for employees, but also for employers who can attract the right talent at the right time.

However, it also poses new challenges on business, social, human, legal, and technological levels. With more and more participants, it will soon require new legislation to regulate it. 

The pandemic and a disrupted economy have accelerated the growth of digital platform work. If the gig economy continues to expand so rapidly, it can overtake the traditional job market.

Digital platform work is changing the contemporary business landscape. Thus, your company must be ready to welcome more platform workers … and put them on payroll!

Is your payroll solution ready for the gig economy?

Symmetrical is a better way to run payroll and HR admin. We enable fast-paced companies to onboard at scale and run their payroll invisibly. To run your payroll hassle-free and on autopilot, contact our experts to learn more!

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The Gig Economy: flexible freedom or wage slavery?
Gig Economy Statistics and Trends
Gig Economy Trends 2024: 5 Predictions
23 Gig Economy Statistics
COVID and the Gig Economy
Projected gross volume of the gig economy from 2018 to 2023
Gig Economy: Definition, Statistics & Trends
Gig Economy – The Economic Backbone of the Future?
The hidden downsides of freelancing
Gig Economy Statistics: Demographics and Trends
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EU Proposes New Protections for Gig Workers
New EU rules could turn 4.1 million gig workers into regular employees
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5 things to know about the EU’s gig worker plans
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